THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION

question 150

Essay

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:
As director of the local tourist board,you are interested in determining the factors that influence the hotel occupancy rate in your city each month.Hotel occupancy can be measured as the percentage of available hotel rooms that are occupied by paying customers.You develop the following model: Y = β₀ + β₁X₁ + β₂X₂ + β₃X₃ + β₄X₄ + ε,where Y is the hotel occupancy rate,X₁ is the total number of passengers arriving at the airport,X₂ is a price index of local hotel room rates,X₃ is the consumer confidence index,and X₄ is a dummy variable = 1 during the months of June,July,and August.You look at data from the past 36 months and obtain the following results:
= 67.1 + 0.02x₁ - 0.055x₂ + 0.08x₃ + 12.3x₄,R² = 0.67,
= 58.3,
= 0.008,
= 0.01,
= 0.06,
= 4.7,and SSE = 576.
-What are your hypotheses regarding this model? Explain.Are there any other variables you would have liked to include?

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Definitions:

Hypotheses

Proposed explanations made on the basis of limited evidence as a starting point for further investigation.

Hypothesis

A proposed explanation made on the basis of limited evidence as a starting point for further investigation.

Economic Generalization

Broad principles or concepts in economics that apply across a range of scenarios and are used to simplify the analysis of economic behaviors and trends.

Confidence

The degree of optimism or pessimism that consumers and businesses feel about the overall state of the economy and their personal financial situations, influencing their spending and investment decisions.